Dell’s AI Server Backlog Grows, but Revenue Outlook Disappoints, Stock Dips 2% After Hours

Detailed Insights into Dell Technologies’ Latest Earnings and Market Reaction

Dell Technologies, a leading name in server and PC manufacturing, recently shared its earnings report after the market closed, revealing a mixed bag of results that left investors underwhelmed. Despite a surge in artificial intelligence (AI) server orders, the company’s revenue projections fell short of Wall Street expectations, triggering a roughly 2% drop in its stock price during after-hours trading. This development comes as Dell navigates a competitive landscape in the AI server market, vying for dominance alongside rivals like Super Micro Computer and Hewlett Packard Enterprise. For those tracking Dell Technologies’ stock performance or the broader AI server market trends, this report dives deep into the earnings details, the factors behind the disappointing revenue outlook, and what it means for the company’s future. 

The latest earnings cover Dell’s fiscal fourth quarter, spanning November 2024 to January 2025, where the company posted revenues of $23.9 billion. This figure reflects a solid 7% increase compared to the same period last year, showcasing growth in its operations. However, it failed to meet the $24.6 billion that analysts surveyed by FactSet had anticipated, signaling that Dell’s performance didn’t fully align with market optimism. On a brighter note, the adjusted earnings per share (EPS) came in at $2.68, surpassing the expected $2.52, suggesting that Dell maintained profitability despite the revenue shortfall. Looking ahead, Dell provided guidance for its fiscal first quarter (February to April 2025), projecting revenues between $22.5 billion and $23.5 billion. Even the upper end of this range falls below the $23.6 billion analysts had forecasted, while the adjusted EPS guidance of $1.65 also lagged behind the expected $1.78. For the full fiscal year 2026, starting this February, Dell anticipates revenues between $101 billion and $105 billion, with a midpoint of $103 billion slightly undercutting the $103.4 billion analyst consensus, though its full-year adjusted EPS forecast of $9.30 edges out the predicted $9.26. 

A key highlight from the earnings is Dell’s growing traction in the AI server market, a sector that’s increasingly vital as businesses adopt advanced computing solutions. Chief Operating Officer Jeff Clarke emphasized the company’s robust outlook for AI, noting how Dell is expanding its reach from large-scale cloud services to enterprise AI servers and edge AI applications in PCs. This optimism is backed by a significant uptick in AI server order backlogs, fueled by new contracts with high-profile clients like xAI, the AI startup led by Tesla CEO Elon Musk, alongside other enterprises. Yet, despite this demand surge, the revenue outlook paints a less rosy picture. Analysts suggest that supply chain hiccups, particularly delays in receiving Nvidia’s latest Blackwell chips, may be hampering Dell’s ability to convert these orders into timely sales. These chips are critical for powering next-generation AI servers, and their delayed availability could be pushing revenue recognition into future quarters, thus dampening short-term projections. 

Adding nuance to the story, Dell’s storage business appears to be underperforming relative to its AI server growth. While AI server shipments are on the rise, storage revenues have reportedly stayed flat year-over-year, missing the anticipated 18% growth some had projected. This disconnect hints at broader challenges in bundling storage solutions with AI server deployments, potentially limiting Dell’s ability to maximize revenue from its expanding backlog. Such dynamics are crucial for investors analyzing Dell Technologies’ AI server market performance, as they reveal the complexities of translating order momentum into immediate financial gains. Meanwhile, the company’s PC and server segments continue to compete fiercely, with Dell positioning itself as a key player in enterprise IT infrastructure amid rising demand for AI-driven solutions. 

The market’s reaction was swift and telling. During regular trading, Dell’s stock plummeted 6.8%, closing at $107.83, a decline likely fueled by early leaks or expectations of the earnings miss. The additional 2% slide in after-hours trading underscores investor disappointment with the revenue guidance, despite the positive notes on EPS and AI server demand. For those monitoring Dell Technologies’ stock price trends, this dip reflects broader concerns about near-term growth prospects, even as the company builds a strong foundation in the AI server space. The interplay between supply chain constraints, such as Nvidia chip delays, and Dell’s ambitious AI strategy suggests that while long-term potential remains intact, short-term hurdles could keep the stock under pressure. 

For stakeholders, from casual investors to industry analysts, Dell’s latest earnings offer a window into the evolving AI server market landscape. The company’s ability to secure high-profile contracts and boost its order backlog signals a competitive edge, yet the revenue shortfall highlights execution challenges that can’t be ignored. As Dell continues to innovate and expand its AI offerings, its success will likely hinge on overcoming supply bottlenecks and aligning its storage and server businesses more effectively. This earnings cycle leaves the market with a clear takeaway: while Dell Technologies is riding the AI wave, translating that momentum into consistent revenue growth remains a work in progress, keeping its stock performance in the spotlight for the foreseeable future.